Minnesota

Minnesota Approves Electronic Charitable Gambling To Help Fund Football Stadium

While several states are spending their 2018 legislative sessions arguing over the specifics of proposed online gambling legislation or wrangling over whether to take the leap at all, legislators in Minnesota have been more focused on expanding the state’s existing charitable gaming laws for the first time in a generation in order to help raise the funds necessary to build a new football stadium for the Minnesota Vikings.

“The Land of 10,000 Lakes” is one of the first to give electronic gambling devices the legislative green light, and vendors of such equipment are coming to Minnesota in droves wanting to make a deal.

Knowing that charitable gaming generated nearly $1 billion last year, Minnesota lawmakers are hoping the addition of electronic pull-tab and bingo games in as many as 1,200 licensed charitable establishments and fraternal organizations will raise the $348 million that will represent the state’s share of funds needed to build the stadium. But the potential for success is just that–potential, and Tom Barrett, executive director of the Minnesota Gaming Control Board knows it. “Our work is just beginning,” Barrett said. “Bingo has been legal since 1946. Pull-tabs since 1985. This is the first time they’ve really changed.” Only a few other states, Florida, Idaho, and Illinois, have similar equipment in operation. Some organizers and heads of charities are wondering whether the iPad-like machines will be user-friendly enough, and whether it will draw a younger, equally enthusiastic audience. Yet others are wondering whether the change will be worth it just to build a stadium. But before anyone finds out, the devices will undergo testing under the state’s watchful eye, and only thereafter will the success or failure of the gambling expansion be known.[1]

Another recent move that should benefit gambling as a whole in Minnesota is the unlikely agreement between a racetrack owner, one of the state’s Native American tribal leaders, and so-called “quiet maneuvering” by two of the state’s highest elected officials. After watching horse-racing purses fall season after season, Patrice Underwood, Executive Director of the Minnesota Horsemen’s Benevolent and Protective Association, knew something had to happen, and the state legislature’s unwillingness for years to pass laws that expanded gambling outside that of the charitable variety only made the truth harder to swallow–the Minnesota horse racing industry was dying.

But one day a phone call brought new hope. Leaders of the Mdewakanton Sioux tribe proposed a deal to give Canterbury Park $75 million over a decade if the track ceased its futile efforts to add slot machines. Not only was the deal a surprise to everyone at Canterbury Park, but it almost never happened. Only after an aide to Gov. Mark Dayton, with the help of House Speaker Kurt Zellers, extended a “pretty please,” did tribal leaders return the phone call from horse industry representatives. The funding from the tribes practically saved the state’s horse-racing industry. “It’s a big shot in the arm,” said Doug Schoepf, racing secretary at Canterbury Park. “It’s going to make racing in Minnesota more competitive.” Canterbury Park will receive $2.7 million from the tribes this year, then up to $8.1 million a year later on.[2]

Settlers, Natives, And Bingo–Minnesota’s History Of Gambling

Minnesota’s history of gambling began in much the same way as other states. Settlers brought with them the gambling habits of Europe, and the Native Americans also had their own forms of gambling entertainment. And while gambling in the Gopher State has taken place since the time of the settlers, in wasn’t until 1945 that bingo was legalized, but only for charity. And while the majority of Minnesota residents knew slot machines existed below the government’s radar, it wasn’t a surprise when Gov. Luther Youngdahl whittled the state’s slot machine population from nearly 8,600 in 1946, to under 1,000 in 1950, then to just two in 1952. Another change came in 1963 when state code was modified to exempt “private social bets not part of or incidental to organized, commercialized, or systematic gambling.”

The legislature added sales tax to bingo in 1967, marking the first time that a boost in revenue was noticed. This caused a gradual increase in allowable forms of charitable gambling. By 1978, paddlewheels, raffles, and tipboards all were legal. Pull-tabs were allowed in 1981. That same year, Big Bucks bingo parlor opened on the Fond du Lac reservation. Shortly thereafter, the Mdewakanton Sioux opened the Little Six parlor on their reservation in nearby Shakopee. In 1982, the legislature’s second attempt at creating a state lottery passed in the Senate, but not in the House.[3]

An amendment legalizing horse racing passed in 1982. A year later, the Minnesota Racing Commission was formed, and the state’s first track, none other than Canterbury Downs, was off and running in 1985. A second horse-racing track, Running Acres Harness Park, opened in 2008. Both tracks now offer not only races, but what is called a “card club,” where limited betting is allowed on casino-style card games such as poker, blackjack, and EZ-Baccarat.[4]

By 1987, 14 bingo halls were open for business and a year later, the state saw how lucrative charitable gambling could be. More than 3,400 licenses had been issued, and betting amounted to nearly $700 million. Also in 1988, the Minnesota legislature finally received voter approval to create a state lottery. Since its inception, the Minnesota Lottery has taken in more than $2 billion. In 2011 alone, $310 million in prize money was awarded to lottery players, more than $121 million went to the state, and retailers made $30.4 million. Some of the state programs that benefit from lottery proceeds include education, public safety, local governments, and health care.[5]

About the same time the lottery was created, the Indian Gaming Regulatory Act was enacted, which enabled the state to enter into agreements, or compacts, with tribes as to how their gambling establishments would be run. By 1991, Minnesota had reached compacts with 11 tribes on video gaming machines, and by 1992, Minnesota had 14 tribal casinos in operation.[6]

No Online Gambling Yet, But Electronic Gambling Is A Step In The Right Direction

Minnesota legislators have yet to consider online gambling laws. It took them 25 years to change existing gambling laws to allow e-gaming of pull-tabs and bingo games so that charitable organizations can increase revenue needed to fund a new stadium for the state’s beloved Vikings. However, if e-gaming proves to be successful, perhaps Minnesotans will also be ready to enter the realm of regulated Internet gambling.

Keep in mind that the Gopher State is still without a commercial casino, although the card clubs at Canterbury Downs and Running Acres do offer some casino-style card games. So while Minnesota is seemingly in the forefront with only a handful of other states in electronic gaming, which certainly can be considered a more modern form of gambling, they are not in the same position with land-based gambling offerings. For now, it looks as though the Midwestern state is content with the types of gambling currently on its books, but legislators will certainly have to consider the feasibility of online gambling as other states begin regulating and profiting from it.